Problem
Culver Construction Inc. uses the completed contract method for tax purposes and the percentage completion method for accounting purposes Assume that on July 15, 2023, a new income tax rate is enacted that lowers the corporate rate from 30% to 28%, effective January 1, 2025. Culver Construction Inc. has one temporary difference at the beginning of 2023 related to $1.19 million tax deferral from using the completed contract method. Culver therefore had a Deferred Tax Liability account at January 1, 2023 with a balance of $357,000 ($1,190,000 x 30%). The $1,190,000 in gross pro?t recognized to date is expected to be taxed in 2026.
Calculate the deferred tax liability at July 15,2023 after taking into account the change in tax rates.